May 20, 2009

Obama Seeks Action Against Credit Card Industry

By PETER BAKER

RIO RANCHO, N.M.  President Obama stepped up his populist campaign against the credit card industry on Thursday, pressing Congress to pass new limits on “anytime, any-reason rate hikes,” unfair late fees and misleading policies.

As the Senate deliberated on legislation, Mr. Obama convened a town-hall-style meeting here led off by a woman who complained of being gouged by her credit card company. The president cited her story to make the case that banks and credit card companies have been taking advantage of loose rules to make money at the expense of hard-working Americans.

“We’re lured in by ads and mailings that hook us with the promise of low rates while keeping the right to raise those rates at any time for any reason  even on old purchases,” he told hundreds of people gathered in a high school auditorium. “You should not have to worry that when you sign up for a credit card you’re signing away all your rights. You shouldn’t need a magnifying glass or a law degree to read the fine print that sometimes doesn’t even appear to be written in English.”

Appealing to popular resentment in a time of economic trouble, he cast himself as a reformer taking on a powerful industry.

“Enough’s enough,” Mr. Obama said. “It’s time for strong, reliable protections for our consumers. It’s time for reform that’s built on transparency and accountability and mutual responsibility, values fundamental to the new foundation we seek to build for our economy.”

The House has passed legislation imposing new limits on credit card practices, but the Senate has slowed its consideration of a similar bill. Senate aides said the bill was likely to come to the floor early next week, and it is expected to pass. The House and Senate would then have to reconcile their versions before agreeing on a final measure to send to the White House. Mr. Obama repeated his demand that Congress send it to him by Memorial Day.

Credit card debt has increased by 25 percent in the last decade, with delinquency rates up more than a third since 2006, according to statistics cited by the White House. Americans pay $15 billion in penalty fees a year, accounting for about 10 percent of the industry’s revenues. About one-fifth of those carrying credit card debt pay more than 20 percent in interest.

The White House arranged for an aggrieved customer who sent the president an e-mail message last week, Christine Lardner, to introduce him to the crowd here on Thursday. Ms. Lardner, an Albuquerque resident, told the crowd that she puts some of her daughters’ college costs on a credit card and when she was approaching the limit, instructed the school to switch payment methods. By mistake, the school charged another tuition payment to her card, putting her over the limit. The credit card company then increased her rate to nearly 30 percent from 9.24 percent.

“Raising my rate to 30 percent is ludicrous and corrupt,” she told the crowd to loud applause. The policies may be legal, “but they are ethically wrong and citizens who want to pay their bills are being taken advantage of.”